You are on page 1of 46

PREFACE

In order to be able to crumble with the altering environment it is

necessary to have some practical experience. As the students of Business

Administration we have to pass through a series of various managerial

techniques. During this practical course we are provided with an

opportunity to learn that how the theoretical knowledge can be

implemented in practical grounds.

I was selected to do my internship in National Bank of Pakistan

Circular Road Branch D.I.Khan. I worked there for six weeks & it gave

me a greater practical knowledge about the operations of a bank.

Dedication
-1-
I dedicate this to my Beloved Parents for all their love
& attention which has made it possible for me to make it up
to this point and as well as the Internship Advisor Mr.
FARYAL MUBEEN, who bestowed me with the courage,
the commitment and the awareness to follow the best
possible route, by his unmatchable style and by best
possible training

ACKNOWLEDGEMENT

-2-
I am highly grateful to almighty Allah who gave me the power to
complete this report.

I am also highly thankful to my honorable teachers for theirs


guidance.

I am indebted to all the employees of National Bank of Pakistan

Circular Road Branch D.I.Khan Special thanks to “SAIMA

JAMIL” OM/BM of National Bank of Pakistan Circular Road

Branch and all other employees of the branch for their

cooperation.

CHAPTER
1
VISION

To be recognized as a leader and a brand synonymous with trust, highest


standards of service quality, international best practices and social
responsibility.

-3-
MISSION

NBP will aspire to the values that make NBP truly


the Nation’s Bank, by:
• Institutionalizing a merit and performance culture
• Creating a distinctive brand identity by providing the
highest standards of services
• Adopting the best international management practices
• Maximizing stakeholders value
• Discharging our responsibility as a good corporate
citizen of Pakistan and in countries where we operate

CORE VALUES

• Highest standards of Integrity


• Institutionalizing team work and performance culture
• Excellence in service
• Advancement of skills for tomorrow’s challenges
• Awareness of social and community responsibility
• Value creation for all stakeholders

-4-
GOALS

To enhance profitability and maximization of NBP share through increasing


leverage of existing customer base and diversified range of products

Summary
The NBP was established vide NBP Ordinance No. National Bank of Pakistan maintains
its position as Pakistan's premier bank determined to set higher standards of
achievements. Growth in Deposits was accompanied by increase in Bank portfolio in
advances. NBP advances reached Rs.554.4 million by December 1959, which was one
third of the total schedule bank credit National Bank of Pakistan is the largest commercial
bank operating in Pakistan . In today's competitive business environment, NBP needed to
redefine its role and shed the public sector bank image, for a modern commercial bank.
National Bank of Pakistan is today a progressive, efficient, and customer focused
institution. The Bank has expanded its range of products and services to include Shariah
Compliant Islamic Banking products. The Bank's joint ventures are United National Bank
(UK), First Investment Bank and NAFA, an Asset Management Company (a joint

-5-
venture with NIB Bank & Fullerton Fund Management of Singapore).Since NBP is a
commercial bank, it performs a variety of functions. Like other commercial banks, NBP
is engaged in financing international trade. Profit Before taxation shows declining trend
18% decrease in current year profit with decreasing rate of 6% this decrease is caused by
greater increase in Interest expense increase from 5% to 35% with 200% growth rate this
increase is because of greater increase in other charges with growth rate of 1655%,
Admin expense increase from 5% to 27%, Profit after tax in current year less than the
previous year because of greater increase in Current taxation by 37% as compare to last
year tax. Cash & balance with treasury Banks is increase in current year from 12% to
13% of total assets portion of balance with other banks shows decreasing trend in current
year 4.7% of total assets as compare to 4.9% and 6.4% in 2007 and 2006 respectively,
lending to financial institution decreasing other assets portion is increasing in current year
which is 5.4% of total assets as compare to 4.06% and 4.3% in 2007 and 2006
respectively. Net assets portion is decreasing this decrease because of increase in

liabilities which means in NBP’s debts increase, equity portion also increasing as
compare to previous year of equity portion this increase because of increasing in reserves,

the increase in equity show that the NBP’s dependence on equity financing increasing
while the dependence on debt financing decreasing, Markup/ interest unearned show
increasing trend last few years but markup/ expensed increase which is 64.5% of interest
income as compare to 50% and 46% in 2007 and 2006, markup interest income after
provisions show decreasing trends since 2006 this decrease because of greater increase in
provision against non performing advances and provision for/ diminution in the value to
investment. NBP has the relative competence in having more deposits than the other
bank. Customers feels secure their money in NBP. NBP can utilize the electronic banking
opportunity to ensure on line banking 24 hours a day. Banks are played role in trade and
commerce. So the business of commercial banks is increase. The bank is facing threats
with the emergence of new competitors especially in terms of foreign banks. So increase

-6-
in no. of banks is a threat for NBP, Modern and computerized banking is required to
fulfill the customer’s need. Net assets portion is decreasing this decrease because of
increase in liabilities which means in NBP’s debts increase, equity portion also increasing
as compare to previous year of equity portion this increase because of increasing in
reserves, the increase in equity show that the NBP’s dependence on equity financing
increasing while the dependence on debt financing decreasing Markup/ interest unearned
show increasing trend last few years but markup/ expensed increase which is 64.5% of
interest income as compare to 50% and 46% in 2007 and 2006, markup interest income
after provisions show decreasing trends since 2006 this decrease because of greater
increase in provision against non performing advances and provision for/ diminution in
the value to investment. NBP has the relative competence in having more deposits than
the other bank. Customers feels secure their money in NBP. NBP can utilize the
electronic banking opportunity to ensure on line banking 24 hours a day. Banks are
played role in trade and commerce. So the business of commercial banks is increase. The
bank is facing threats with the emergence of new competitors especially in terms of
foreign banks. So increase in no. of banks is a threat for NBP Modern and computerized

banking is required to fulfill the customer’s need. NBP have wide network of branches.
Employee can also be how to control the bank expenses.

History of NBP
The NBP was established vide NBP Ordinance No. XIX of November 9. 1949.

British Govt. devalued its currency in September 1949, India devalued its rupees but
Pakistan did not. It led to a crisis in trading between the two countries and India refused
to lift the Pakistan Jute. To solve this problem i.e. to export jute NBP was established
through an Ordinance of GOP. National Bank of Pakistan maintains its position as
Pakistan's premier bank determined to set higher standards of achievements. It is the
major business partner for the Government of Pakistan with special emphasis on fostering
Pakistan's economic growth through aggressive and balanced lending policies,

-7-
technologically oriented products and services offered through its large network of
branches locally, internationally and representative offices.

The Bank in 1950 had one subsidiary ‘The Bank of Bahawalpur’ on December4, 1947 by
the former Bahawalpur State.NBP was undertaking Treasury Operations and Managing
Currency Chests or Sub Chests at 57 of its offices where the turnover of the business
under the head amounted to Rs.2460 million. Deposits held by NBP constituted about
3.1% of total deposits of all Pakistani Banks in 1949, which rose to 38% in 1952. Growth
in Deposits was accompanied by increase in Bank portfolio in advances. NBP lent out to
Textile, Yarn, Iron and Steel and played a pioneer role in support of agriculture and
commerce. NBP advances reached Rs.554.4 million by December 1959, which was one
third of the total schedule bank credit

National Bank of Pakistan is the largest commercial bank operating in Pakistan . Its
balance sheet size surpasses that of any of the other banks functioning locally. It has
redefined its role and has moved from a public sector organization into a modern
commercial bank. The Bank's services are available to individuals, corporate entities and

government. While it continues to act as trustee of public funds and as the agent to the
State Bank of Pakistan (in places where SBP does not have a presence) it has diversified
its business portfolio and is today a major lead player in the debt equity market, corporate
investment banking, retail and consumer banking, agricultural financing, treasury

services and is showing growing interest in promoting and developing the country's small
and medium enterprises and at the same time fulfilling its social responsibilities, as a
corporate citizen.
In today's competitive business environment, NBP needed to redefine its role and shed

the public sector bank image, for a modern commercial bank. National Bank of Pakistan

is today a progressive, efficient, and customer focused institution. It has developed a wide

range of consumer products, to enhance business and cater to the different segments of

-8-
society. It has implemented special credit schemes like small finance for agriculture,

business and industries, administrator to Qarz-e-Hasna loans to students, self employment

scheme for unemployed persons, public transport scheme. The Bank has expanded its

range of products and services to include Shariah Compliant Islamic Banking products.

For the promotion of literature, NBP recently initiated the Annual Awards for Excellence

in Literature. NBP will confer annual awards to the best books in Urdu and in all

prominent regional languages published during the defined period. Patronage from NBP
PRESIDENT
PRESIDENT
would help creative work in the field of literature. The Bank is also the largest sponsor of
MEMBER
MEMBERBOARD BOARD
sports in Pakistan. In 2002 the Bank signed an agreement with Western Union for
SENIOR
SENIOR
expanding the base EXECTIVE
EXECTIVE
for documented VICE-PRESIDENT
VICE-PRESIDENT
remittances. This project introduces technology

based system to handle inward remittances


EXECUTIVE efficiently, by ensuring that the Bank's
EXECUTIVEVICEVICEPRESIDENT
PRESIDENT
branches keep a track of the remittance received from abroad till its final receipt.
SENIOR
SENIORVICE VICEPRESIDENT
PRESIDENT
HIERARCHY
BRANCHHIERARCHY

CHAPTER
VICE
VICEPRESIDENT
PRESIDENT 2
Corporate Information:
BRANCH

ASSISTANT
ASSISTANTVICE
VICEPRESIDENT
PRESIDENT
ORGANANIZATIONAL STRUCTURE

OFFICER
OFFICERGRADE
GRADE II

OFFICER
OFFICERGRADE
GRADE 22

OFFICER
OFFICERGRADE
GRADE 33

MESSENGER
MESSENGER

PEON
PEON
-9-
SWEEPER
SWEEPER
BRANCHES ALL OVER THE COUNTRY

- 10 -
29 Regional Offices
1250 Branches
4 Subsidiaries

- 11 -
Oversea Branches

16 Overseas Branches 29 Regional Offices

4 Representative Offices 1250 Branches


1 Subsidiary 4 Subsidiaries

1 Joint Venture

CHAPTER 3
- 12 -
Functions of NBP
Since NBP is a commercial bank, it performs a variety of functions.

Like other commercial banks, NBP is engaged in financing international trade. Its other
major functions include receiving deposits, advancing loans and discounting of exchange.
The functions performed by NBP are:

Accepting Deposits

This function is important because banks largely depend on the funds deposited with
them by its customers. Deposits are of many types:

• Current deposits

Current deposits are also called demand liability on current deposits. NBP pays
practically no interest on current deposits. Businessmen usually open current
accounts. In NBP current account can be opened with a minimum amount of
Rs.500/-.

• PLS saving deposit

Profit and loss sharing deposits (PLS) are also called checking accounts. One can
deposit and draw money easily. Profit on PLS is calculated every month but paid after
six months. PLS account can be opened with a minimum amount of Rs.500/-

- 13 -
• PLS term deposits

Fixed term deposits are deposits with the bank for certain fixed period before the
expiry of which they cannot be withdrawn unless giving due notice. In this case the
rates of profit will be different depending upon the time period.

Discounting bills of exchange

Discounting of bill is practically speaking lending for exchange at their market rate i.e. it
pays to holder of the bill an amount equal to the face value after deducting interest at the
current market rate for the period. This bill has to be mature. This is the common way
used for keeping a part of assets of the bank in a liquid form.

Agency service

NBP also provides best and unique service to its valued customers. NBP provide the
following agency services to the customers:

• Collection of dividends

As NBP deals with the purchase and sale of various types of securities, therefore NBP
also provide dividend or interest earned on share or bonds or invested money.

• Collection of Cheques

In the collection and payment of Cheques, bills and promissory notes etc. National
bank of Pakistan acts as an agent for its customers.

• Acting as an agent

NBP also acts as an agent correspondent or representative for its customer at home or
abroad.

- 14 -
• General utility services:

Utilities provided by NBP are as follows:

a. Clearance of utility bills

NBP provides the service of clearing the utility bills i.e. electricity, gas and telephone
bills of its customers. For this purpose it also provides evening banking services.

b. Lockers facility

National bank of Pakistan also provides locker facilities to its customers to keep their
valuable assets in it. The charges of different size of lockers are different.

c. Acts as a referee

NBP provides useful services to its customers by acting as a referee to their credit
worthiness.

d. Supply of information

NBP provides operational and advisory service for foreign exchange accounts/activities.

The prestigious periodical “The Banker” UK recognized NBP as the best bank for 2001-
2002 and NBP is the bank of the year for 2003-2004 of Pakistan.

- 15 -
CHAPTER 4
Product and Services

1. DEMAND DRAFTS

If you are looking for a safe, speedy and reliable way to transfer money, you can now
purchase NBP’s Demand Drafts at very reasonable rates. Any person whether an account
holder of the bank or not, can purchase a Demand Draft from a bank branch.

2. SWIFT SYSTEM

The SWIFT system (Society for Worldwide Inter bank Financial Telecommunication)
has been introduced for speedy services in the area of home remittances. The system has
built-in features of computerized test keys, which eliminates the manual application of
tests that often cause delay in the payment of home remittances. The SWIFT Center is
operational at National Bank of Pakistan with a universal access number NBP-APKKA.
All NBP overseas branches and overseas correspondents (over 450) are drawing
remittances through SWIFT.

Using the NBP network of branches, you can safely and speedily transfer money for your
business and personal needs.

- 16 -
3. LETTERS OF CREDIT

NBP is committed to offering its business customers the widest range of options in the
area of money transfer. If you are a commercial enterprise then their Letter of Credit
service is just what you are looking for. With competitive rates, security, and ease of
transaction, NBP Letters of Credit are the best way to do your business transactions.

4. TRAVELER'S CHEQUES

Negotiability:

Pak Rupees Traveler’s Cheques are a negotiable instrument

Validity:

There is no restriction on the period of validity

Availability:

At 700 branches of NBP all over the country

Encashment:

At all 400 branches of NBP

Limitation:

No limit on purchase

Safety:

NBP Traveler’s Cheques are the safest way to carry our money

- 17 -
5. PAY ORDER

NBP provides another reason to transfer customer’s money using their facilities. Their
pay orders are a secure and easy way to move customer’s money from one place to
another. And, as usual, their charges for this service are extremely competitive.

Issuance of Pay order

1. For NBP Account Holder Rs. 50/-

2. For NBP Non-Account Holder Rs. 100/-

Issuance of duplicate Pay order

1. For NBP Account Holder Rs. 100/-

2. For NBP Non-Account Holder Rs. 150/-

6. MAIL TRANSFERS

Move your money safely and quickly using NBP Mail Transfer service. And they also
offer the most competitive rates in the market.

7. FOREIGN REMITTANCES

To facilitate its customers in the area of Home Remittances, National Bank of Pakistan
has taken a number of measures to:

•Increase home remittances through the banking system

•Meet the SBP directives/instructions for timely and prompt delivery of


remittances to the beneficiaries

- 18 -
New Features:

The existing system of home remittances has been revised/significantly improved and
well-trained field functionaries are posted to provide efficient and reliable home

remittance services to nonresident Pakistanis at 15 overseas branches of the Bank besides


Pakistan International Bank (UK) Ltd., and Bank Al-Jazira, Saudi Arabia.

•Zero Tariffs: NBP is providing home remittance services without any


charges.

•Strict monitoring of the system is done to ensure the highest possible


security.

•Special courier services are hired for expeditious delivery of home


remittances to the beneficiaries.

8. SHORT TERM INVESTMENTS

NBP now offers excellent rates of profit on all its short term investment accounts.
Whether you are looking to invest for 3 months or 1 year, NBP’s rates of profit are
extremely attractive, along with the security and service only NBP can provide.

9. National Income Daily Account (NIDA)

The scheme was launched in December 1995 to attract corporate customers. It is a


current account scheme and is part of the profit and loss system of accounts in operation
throughout the country.

- 19 -
10. EQUITY INVESTMENTS

NBP has accelerated its activities in the stock market to improve its economic base and
restore investor confidence. The bank is now regarded as the most active and dominant
player in the development of the stock market.

11. TRADE FINANCE OTHER BUSINESS LOANS

AGRICULTURAL FINANCE

NBP provides Agricultural Finance to solidify faith, commitment and pride of farmers
who produce some of the best agricultural products in the World.

12. Agricultural Finance Services:

“I Feed the World” program, a new product, is introduced by NBP with the aim to help
farmers maximize the per acre production with minimum of required input. Select farms
will be made role models for other farms and farmers to follow, thus helping farmers
across Pakistan to increase production.

Agricultural Credit:

The agricultural financing strategy of NBP is aimed at three main objectives:-

•Providing reliable infrastructure for agricultural customers

•Help farmers utilize funds efficiently to further develop and achieve


better production

- 20 -
•Provide farmers an integrated package of credit with supplies of essential
inputs, technical knowledge, and supervision of farming.

Agricultural Credit (Medium Term):

•Production and development

•Watercourse improvement

•Wells

•Farm power

•Development loans for tea plantation

•Fencing

•Solar energy

•Equipment for sprinklers

Farm Credit:

NBP also provides the following subsidized with ranges of 3 months to 1 year on a
renewal basis.

•Operating loans

•Land improvement loans

•Equipment loans for purchase of tractors, farm implements or any other


equipment

•Livestock loans for the purchase, care, and feeding of livestock

- 21 -
Production Loans:

Production loans are meant for basic inputs of the farm and are short term in nature.
Seeds, fertilizers, sprayers, etc are all covered under this scheme.

13. CORPORATE FINANCE


• Working Capital and Short Term Loans:

NBP specializes in providing Project Finance – Export Refinance to exporters – Pre-


shipment and Post-shipment financing to exporters – Running finance – Cash Finance –
Small Finance – Discounting & Bills Purchased – Export Bills Purchased / Pre-
shipment / Post Shipment Agricultural Production Loans

• Medium term loans and Capital Expenditure Financing:

NBP provides financing for its clients’ capital expenditure and other long-term
investment needs. By sharing the risk associated with such long-term investments, NBP
expedites clients’ attempt to upgrade and expand their operation thereby making possible
the fulfillment of their clients’ vision. This type of long term financing proves the bank’s
belief in its client's capabilities, and its commitment to the country.

• Loan Structuring and Syndication:

National Bank’s leadership in loan syndicating stems from ability to forge strong
relationships not only with borrowers but also with bank investors. Because they
understand their syndicate partners’ asset criteria, they help borrowers meet substantial
financing needs by enabling them to reach the banks most interested in lending to their

- 22 -
particular industry, geographic location and structure through syndicated debt offerings.
Their syndication capabilities are complemented by their own capital strength and by
industry teams, who bring specialized knowledge to the structure of a transaction.

• Cash Management Services:

With National Bank’s Cash Management Services (in process of being set up), the
customer’s sales collection will be channeled through vast network of NBP branched
spread across the country. This will enable the customer to manage their company’s total
financial position right from your desktop computer. They will also be able to take
advantage of NBP outstanding range of payment, ejection, liquidity and investment
services. In fact, with NBP, you’ll be provided everything, which takes to manage your
cash flow more accurately.

INTERNATIONAL BANKING

National Bank of Pakistan is at the forefront of international banking in Pakistan which is


proven by the fact that NBP has its branches in all of the major financial capitals of the
world. Additionally, NBP have recently set up the Financial Institution Wing, which is
placed under the Risk Management Group. The role of the Financial Institution Wing is:-

•To effectively manage NBP’s exposure to foreign and domestic


correspondence

- 23 -
CHAPTER
5
Practical Experience:

LEARNING AS A STUDENT INTERN:

There are following learning points for me in the bank.

Duties

In my 1st and 2nd week in NBP I work under the assistance of Saima Jamil (Branch
manager and Operation Manager) from her I learn about activities related to Deposit
Dept: and performed such activities like:

• Opening an account
• Issue new cheques books

And I also scroll the challan of Government and pass vouchers.

In my 3rd,4th week in NBP, they assign me work related to pension department. Saima
Jamil (Operation Manager) guides me very nicely and I learned lot of things pension
related activities. They give the pension to retired Govt. employees. There are three types
of pensions given,

• Provincial
• Central
• Defense

These are different according to their PPO numbers

- 24 -
For example:

Provincial PPO 123456

Central PPO 12345/pak

Defense PPO da/dg1/gh/4 etc.

I am full trained now in this particular job and I serve lot of people in this week. How to
fill farm? How to enter in ledgers and balance account and what are file and book and all
other things concerning to pension department?

In 5th and 6th week I work under the assistance of Saima Jamil (Operation Manager) from
her I learn about remittance activities:

• Demand Draft

• Telegraphic Transfer

• Pay Order

• Mail Transfer

- 25 -
DEPARTMENTALIZATION
6
1. CASH DEPARTMENT

Cash department performs the following functions

Receipt:

The money, which either comes or goes out from the bank, its record should be kept.
Cash department performs this function. The deposits of all customers of the bank are
controlled by means of ledger accounts. Every customer has its own ledger account and
has separate ledger cards.

Payments:

It is a banker’s primary contract to repay money received for this customer’s account
usually by honoring his cheques.

The Requisites of Cheque:

There is no prescribed form of words or design of a Cheque, but in order to fulfill the
requirements Cheque must have the following.

a) It should be in writing

b) The unconditional order

c) Drawn on specific banker only

d) Payment on Demand

- 26 -
e) Sum Certain in money

f) Payable to a specific person

g) Signed by the drawer

Types of Cheques:

Bankers in Pakistan deal with three types of cheques

a) Bearer Cheques

Bearer cheques are cashable at the counter of the bank. These can also be collected
through clearing.

b) Order cheque

These types of cheques are also cashable on the counter but its holder must satisfy the
banker that he is the proper man to collect the payment of the cheque and he has to show
his identification. It can also be collected through clearing.

c) Crossed Cheque

These cheques are not payable in cash at the counters of a banker. It can only be credited
to the payee’s account. If there are two persons having accounts at the same bank, one of
the account holder issues a cross-cheque in favor of the other account holder. Then the
cheque will be credited to the account of the person to whom the cheque was issued and
debited from the account of the person who has actually issued the cheque.

2. CLEARANCE DEPARTMENT

A clearinghouse is an association of commercial banks set up in given locality for the


purpose of interchange and settlement of credit claims. The function of clearinghouse is
performed by the central bank of a country by tradition or by law. In Pakistan, the

- 27 -
clearing system is operated by the SBP. If SBP has no office at a place, then NBP, as a
representative of SBP act as a clearinghouse.

In-Word Clearing Books:

The bank uses this book for the purpose of recording all the cheques that are being
received by the bank in the first clearing. All details of the cheques are recorded in this
book.

Out-Word Clearing Book:

The bank uses outward clearing register for the purpose of recording all the details of
the cheques that the bank has delivered to other banks.

3. ADVANCES DEPARTMENT

Advances department is one of the most sensitive and important departments of the bank.
The major portion of the profit is earned through this department. The job of this
department is to make proposals about the loans. The Credit Management Division of
Head Office directly controls all the advances. As we known bank is a profit seeking
institution. It attracts surplus balances from the customers at low rate of interest and
makes advances at a higher rate of interest to the individuals and business firms. Credit
extensions are the most important activity of all financial institutions, because it is the
main source of earning. However, at the same time, it is a very risky task and the risk
cannot be completely eliminated but could be minimized largely with certain techniques.

Forms of Loans:

In addition to purchase and discounting of bills, bankers in Pakistan generally lend in the
form of cash finance, overdrafts and loans. NBP provides advances to different people in
different ways as the case demand.

a) Cash Finance

- 28 -
This is a very common form of borrowing by commercial and industrial concerns and is
made available either against pledge or hypothecation of goods, produce or merchandise.

In cash finance a borrower is allowed to borrow money from the banker up to a certain
limit, either at once or as and when required. The borrower prefers this form of lending
due to the facility of paying markup/services charges only on the amount he actually
utilizes.

If the borrower does not utilize the full limit, the banker has to lose return on the un-
utilized amount. In order to offset this loss, the banker may provide for a suitable clause
in the cash finance agreement, according to which the borrower has to pay
markup/service charges on at least on self or one quarter of the amount of cash finance
limit allowed to him even when he does not utilize that amount.

b) Overdraft/Running Finance

This is the most common form of bank lending. When a borrower requires temporary
accommodation his banker allows withdrawals on his account in excess of the balance
which the borrowing customer has in credit, and an overdraft thus occurs. This
accommodation is generally allowed against collateral securities. When it is against
collateral securities it is called “Secured Overdraft” and when the borrowing customer
cannot offer any collateral security except his personal security, the accommodation is
called a “Clean Overdraft”. The borrowing customer is in an advantageous position in an
overdraft, because he has to pay service charges only on the balance outstanding against
him. The main difference between a cash finance and overdraft lies in the fact that cash
finance is a bank finance used for long term by commercial and industrial concern on
regular basis, while an overdraft is a temporary accommodation occasionally resorted to.

c) Demand Financing/Loans

When a customer borrows from a banker a fixed amount repayable either in periodic
installments or in lump sum at a fixed future time, it is called a “loan”. When bankers

- 29 -
allow loans to their customers against collateral securities they are called “secured loans”
and when no collateral security is taken they are called “clean loans”.

The amount of loan is placed at the borrower’s disposal in lump sum for the period
agreed upon, and the borrowing customer has to pay interest on the entire amount. Thus
the borrower gets a fixed amount of money for his use, while the banker feels satisfied in
lending money in fixed amounts for definite short periods against a satisfactory security

4. REMITTANCE DEPARTMENT

Remittance means a sum of money sent in payment for something. This department deals
with either the transfer of money from one bank to other bank or from one branch to
another branch for their customers. NBP offers the following forms of remittances.

• Demand Draft

• Telegraphic Transfer

• Pay Order

• Mail Transfer

5. DEPOSIT DEPARTMENT

It controls the following activities:

a) A/C opening.

b) Issuance of cheque book.

a) Current a/c

b) Saving a/c

c) Cheque cancellation

- 30 -
d) Cash

6. FOREIGN EXCHANGE/DEPARTMENT:

This dep’t mainly deals with the foreign business. The main functions of this deptt are:

a) L/C dealing.

b) Foreign currency accounts dealing.

c) Foreign Remittance dealing.

L/C dealing NBP is committed to offering its business customers the widest range of
options in the area of money transfer. If you are a commercial enterprise then our
Letter of Credit service is just what you are looking for. With competitive rates,
security, and ease of transaction, NBP Letters of Credit are the best way to do your
business transactions.

Foreign currency account dealing: This dep’t deals with the foreign currency accounts
which mainly include dollar account, euro account etc.

- 31 -
Financial Review of NBP 7

Declaration of Profit on PLS Deposits for The Half-Year Ended 31-12-2007

Proposed rates
Rates for period
Title of Accounts (01-07-2007 to 31-
ended 30-06-2007
12-2007)

1. Special Notice Deposit's

a) 7 to 29 days Notice 1.20 1.20

b) Over 30 days Notice 1.20 1.20

2. Saving Account's

a) Upto Rs. 20,000 0.20 0.20

b) Above Rs. 20,000 1.20 1.20

3. Term Deposit's

a) Three months 1.50 1.50

b) Six months 1.80 1.80

c) One year 2.00 2.00

d) Two years 2.30 2.30

e) Three years 2.60 2.60

- 32 -
f) Four years 2.90 2.90

g) Five years 3.25 3.25

h) Above five years 4.00 4.00

Financial Highlights – 2008 (Rs. In Million)


Authorized capital 7,500
Paid-up-capital 7,091
Shareholders equity & Reserve 81,954
Deposits 501,872
Advances 316,110
Investment 139,947
Total assets 635,133
Pre- tax profit 26,311
After-tax profit 17,022
No. branches 1,250
No. employees 14,019

Six year performance At a Glance (Rs. In million)

Year Total Deposits Advances Investment Shareholder


Assets Equity

2003 415,089 349,617 170,319 71,759 11,959

2004 432,803 362,866 140,547 143,525 14,279

2005 468,972 395,492 161,266 166,196 18,134

- 33 -
2006 553,231 465,572 220,794 149,350 24,900

2007 557,719 463,427 268,839 156,985 37,636

2008 635,133 501,872 316,110 139,947 53,045

Year After-tax EPS ROA No. No.


profit Branches Employees

2003 1,149 3.08 0.8% 1,245 15,163

2004 2,253 5.49 1.4% 1,204 12,195

2005 4,198 8.53 2.0% 1,119 13,272

2006 6,195 10.48 2.4% 1,226 13,745

2007 12,709 17.92 3.4% 1,242 13,824

2008 17,022 24.01 4.3% 1,250 14,019

- 34 -
SWOT ANALYSIS 8

SWOT analysis is an acronym that stands for strengths, weakness, opportunities,


and threats SWOT analysis is careful evaluation of an organization’s internal
strengths and weakness as well as its environment opportunities and threats.
“SWOT analysis is a situational which includes strengths, weaknesses,
opportunities and threats that affect organizational performance.”1
“The overall evaluation of a company strengths, weaknesses, opportunities and
threats is called SWOT analysis.”2
In SWOT analysis the best strategies accomplish an organization’s mission by:
1. Exploiting an organizations opportunities and strength.
2. Neutralizing it threats.
3. Avoiding or correcting its weakness.
SWOT analysis is one of the most important steps in formulating strategy using
the organization mission as a context, managers assess internal strengths
distinctive competencies and weakness and external opportunities and threats. The
goal is to then develop good strategies and exploit opportunities and strengths
neutralize threats and avoid weaknesses.

- 35 -
STRENGTHS

Oldest Institution:

NBP in one of the oldest bank of Pakistan and first nationalized bank Hence its customer base is
strength from this plus point as customers have more confidence in the bank. The additional value
services as the privilege for the bank.

Alternate duties in SBP Absence:

The NBP performs additional services for its customers as well as the other bank
customer in the absence of SBP.

More deposits than other Banks:

NBP has the relative competence in having more deposits than the other bank. This is because of
the confidence the customer have in the bank. The bank being the privileged and oldest bank in
banking sector of Pakistan enjoys this edge over all others, lacking it.

Broad Network:

The bank has another competency i.e. it has broad-basses network of branches throughout the
country also more than one branch in high productive cities. The customers are provided services
at their nearest possible place to confirm customer satisfied.

Strictly followed rules & regulations:

The employees at NBP are strict followers of rule & regulation imposed by bank. The disciplined
environment at NBP bolsters its image and also enhances the over all out put of the organization.

Professional Competence:

The employees at NBP here have a good hold on their descriptions, as they are highly skilled
Professionals with back ground in business administration, banking, economics

- 36 -
etc. These professional competencies enable the employees to understand and perform the
function and operation in better way.

Western union facility:

National Bank of Pakistan is only one bank which has the facility of Western union. In this
particular scheme money is transfer in Pakistan from abroad. This is the fastest way to money
transfer. You can receive the money from bank to see the name and password of particular client.

ATM finder:

There is also strength of NBP that they are found the ATM. They now provide this facility to the
customers.

Customer satisfaction:

Because of government’s bank, it is enjoying the customer’s satisfaction. Customers feels secure
their money in NBP.

Online banking:

There is also strength of NBP that 130 branches are online. It helps the speedy services giving to
the customers. There is also help in checking the balances and daily transactions just at one key
press.

Employee’s loyalty: Employees are very much loyal to NBP. Employee’s turnover is very low in
NBP. Very few employees are leaving the jobs in NBP. So it is very big strength that your
employees are loyal to your organization.

WEAKNESSES:

Lack of Marketing Effort:

- 37 -
The bank does not promote its corporate image, services, etc on a competitive way. Hence lacks
far behind in marketing effort .A need for aggressive marketing in there in the era marketing in
now becoming a part of every organization.

- 38 -
NBP under Political Pressure:

The strong political hold of some parties and government and their dominance is affecting the
bank in a negative way. They sometime have to provide loan under the pressure, which leads to
uneven and adjusted feeling in the bank employees.

Lack of Financial Product:

The bank falls far behind when the innovative and new schemes are considered. It has not been
involved in the tug of war between the competitors to the accounts and strengthens the existing
customer base. This stands out to be the major incompetence and weakness of the banks.

Inefficient Counter Services in the Rush Hours:

During the rush hours, the bank is founded out to be a total flop to handle the mob of people
peaking from windows and doors. The bank has deficiency to operate in the stages of rush hours
where the people find them services entangled in a situation of nowhere because they are not well
served.

Lack of Computerized Network:

The bank lack the strength of being powered by the network of computers, which have saved
time, energy and would have lessened the mental stress, the employees have currently. This
would add to the strength if it were powered by network of computers.

Lack of Modern Equipment:

The bank lacks the modern Equipment that is note counting machine computers. Even if there is
any equipment they lack to fall in the criteria of being rearmed as update and upgraded

Uneven Work Distribution:

- 39 -
The workload in NBP is not evenly distributed and the workload tends to be more on some
employees while others abscond away from their responsibilities, which server as a demotivation
factor for employees performing above average work.

Public dealing is not very effective:

Public respect is not very effective in NBP. Employees are not taking care of the customers,
especially in pension and bills department.

Staff shortage:

There is also weak point for NBP that staff is very short and more staff is required to meet the
needs of the branch work.

OPPORTUNITIES

Electronic Banking:

The world today has become a global village because of advancement in the
technologies, especially in communication sector. More emphasis is now given to avail
the modern technologies to better the performances. NBP can utilize the electronic
banking opportunity to ensure on line banking 24 hours a day. This would give a
competitive edge over others.

Growing banking system:

Nowadays banking system is growing quickly so NBP have opportunities to improve the standard
and get the more share in the market.

.Increase in economic activities:

- 40 -
The economic activities are increase nowadays, so banks are contributes more in economic
activities. Banks are played role in trade and commerce. So the business of commercial banks is
increase.

THREATS

Emergence of New Competitors:

The bank is facing threats with the emergence of new competitors especially in terms of foreign
banks. These foreign banks are equipped with heavy financial power with excellent and
innovative ways of promoting and performing their services. The bank has to take initiative in
this regard or will find itself far back in competition.

Political Pressure by Elected Govt: The ongoing shift in power in political arena in the
country effects the performance of the bank has to forward loans to politically powerful
persons which create a sense of insecurity and demoralization in the customer as well as
employees.

Customer Complaints:

There exists no regular and specific system of the removal of customer complaints. Now a day a
need for total customer satisfaction is emerging and in their demanding
consequences customer's complaints are ignored

Increase in no. of banks:

Increase in no. of banks is a threat for National Bank of Pakistan. No. of private banks
(commercial and private) are operating their business and provide the same facilities. So increase
in no. of banks is a threat for NBP.

- 41 -
Modern type of banking:

Modern and computerized banking is required to fulfill the customer’s need. So maximum
branches of NBP are worked in old traditional ways.

- 42 -
The whole structure changes to online:

NBP have wide network of branches. Only 130 branches are online, so it is very difficult and
time consumed to convert all branches to online system. So there is also risk involves that if one
commuter of one branch suffers in problem, all system and all commuters of all branches must be
turnoff.

- 43 -
OBSERVATIONS, PROBLEM AND SUGGESTION
9
Problems Observations:

During my internship program, held in N.B.P Circular Road Branch D.I.Khan.


I have found various problems which are mentioned below.

1. General Instructions of the head Office regarding the up keeping maintenance and
cleanness are seldom adhere to. Therefore the working conditions and
environment of the branch is pitiable.

2. More over the allocation of responsibilities and accountability there of is not fully
kept into consideration.

3. There is lack of setting arrangements for customers, even no journal, newspaper


etc are provided by the branch to the employees.

4. No proper facilities are provided for the trainees undergoing internship training
for the branch to enable the trainees even to know the NBP of bank.

5. Most workers of the bank always use to come late on their duty.

6. Non existence of clear cut criteria for the sanction and disbursement of Qarza
hassana loan to poor students on compassionate ground rather most of the cases
loans are sanctioned to well off and influential students.

7. Objectivity in lending is most absent. Loans are extended to the influential people
with out keeping in consideration the suitability of the borrower and security of
loan.

8. Lack of modern technology e.g. computerization of system.

- 44 -
SUGGESTIONS
1. It is the duty of General Administration to abide by the instructions of the head
office and keep the branch neat and clean so that the working condition and
environment of branch becomes better.

2. For better success of the branch it is necessary that every employee of the branch
will be responsible and accountable for his or her duty performances a responsibility
with authority is must.

3. To keep the customer well satisfied it is necessary for management to provide


furniture and facilities in branch.

4. Besides getting things done from the employee, management must also aware
themselves of employee problems.

5. It is recommended that special instructions must be established in connection with


the internees visiting from various universities. And also instruct the concern officers
to co operate with internees in order to encourage them.

6. It is also suggested that time cards should introduced to make the employees
punctual in their duties.

7. An important suggestion regarding advances and yielding Qarz hassna is that, a


proper investigation shall be made before granting there, and influential persons shall
be avoided.

8. I finally suggest that the branch shall adopt some modern ways of doing business
by introducing computerization, because this is the main branch in whole Pandora
region

- 45 -
BIBLIOGRAPHY 10
Annual Report 2008 NBP
Accounts for the half-year ended 30 June 2008
Management by Harold, Koontz and Heinz Weihrich
www.NBP.com.pk
Relationship contract (Account Opening Form, general banking, & credits dep’t)
References:
Sir Gohar Nadeem
Sir Faryal Mubeen
Sir Adeel Ahmad

- 46 -

You might also like